Strengthening Supply Chains Through Risk Management
Global sourcing refers to a corporate procurement strategy in which raw materials, products, and services are sourced from international suppliers. This reduces costs, improves quality, and helps companies tap into new technologies. “It works well,” says Dr. Jens Koenig, Principal Consultant at io, “as long as deliveries can be made reliably.” And that’s precisely the crux of the matter, because: shit happens.
Take Iceland in 2010, for example: the Eyjafjallajökull glacier volcano erupted. Its ash clouds completely paralyzed air traffic across large parts of Europe for several days. Or in Egypt, 2021: A container ship ran aground in the Suez Canal, came to rest at an angle, and blocked the shipping lane for six days. Everything ground to a halt, with hundreds of freighters backed up in both directions. Or in the U.S., 2025: Trump’s tariff policy throws the global economy into turmoil. In the EU alone, goods worth around 26 billion euros are affected.
In light of such events, companies ask: What can I do when supply chains are disrupted? How do I maintain my ability to deliver? How quickly can I make up for missing inventory? And how long will my stock last? “The last question directly addresses resilient supply chains in the context of supply chain management,” says Koenig. “It refers to the time span between the event that disrupts the supply chain and the resulting production stoppage. It’s also known as ‘time-to-survive.’” That may sound macabre, but it’s a key performance indicator (KPI) used in business operations—just like the Global Supply Chain Pressure Index, the Global Peace Index, or the World Risk Index.
Address proactively instead of ignoring
“Once the flood has swept over you, it’s too late to find new suppliers, for example,” Koenig continues. “Political developments, legal stability, the risk of natural disasters: All of these factors are significant in risk management and should be taken into account in appropriate measures—even if no concrete benefit is immediately apparent and, on the contrary, it only costs money.” Caution is especially called for in complex industries such as e-mobility, because manufacturers in this sector rely on a large number of suppliers.
At its core, it often comes down to two levers: inventory levels and the number of suppliers per intermediate product. It is advisable to build up targeted inventories of critical intermediate products that are vulnerable to crises, which runs counter to normal business operations—since inventory costs money. This is especially true when special requirements apply to warehousing (e.g., fire safety regulations for storing certain batteries). Furthermore, high inventory levels in a single location increase vulnerability in the event of a disaster—which brings decentralization into the spotlight, both in manufacturing and in intralogistics.
Multisourcing for Critical Parts
When it comes to selecting suitable suppliers, Koenig recommends multisourcing, “especially for critical parts.” However, even here there are questions that must be answered on a case-by-case basis: What are the critical parts, and are there even alternative suppliers that can reduce the risk at a reasonable cost? Sometimes, the impact of risk can be reduced through clever reorganization, such as by temporarily altering production steps. Occasionally, for the sake of risk management, the production sequence or the level of completion can also be temporarily adjusted—possibly, as Koenig adds. “In the case of electric cars, this requires considerable effort—for example, with seats. These can be retrofitted if necessary in an emergency. But not the wiring harness.” It’s no coincidence that there are supplier networks specifically tailored to automakers located not far from the assembly halls. The key to minimizing risk and damage along the supply chain lies in the structural avoidance of risks, consistent preparation, and the intelligent combination and identification of possible measures.
To determine the resilience of a client’s supply chains, Koenig and his colleagues focus, among other things, on production data. How many parts are needed for key products, where do they come from, and how critical or interchangeable are they? They also simulate disruptions using modern forecasting tools. “For example, we simulate a warehouse failure—and see what happens,” Koenig explains the approach.
“The results of such simulations quantify the impact of disruptions on the flow of materials within the supply chain. They also provide insight into how well the infrastructure is prepared for the simulated disruption and what effects can be expected on the subsequent links in the supply chain.”
This is why components are divided into risk groups and categorized by importance, and why the potential for collaboration with partners and suppliers is explored to jointly address risks. “It may also make sense to explore production options to determine whether critical parts can be manufactured in-house. Or whether a corporate merger might be a viable solution.”
Analysis, Creativity, and Preparation
The measures to reduce the probability of occurrence and minimize damage are customer-specific. To this end, io brings together experts from various disciplines: analytics for quantification and, where necessary, simulation; logistics; supply chain management; and production expertise in process and material flow, as well as building expertise to develop infrastructure solutions.
Discussion, creativity, and critical questioning are indispensable in risk management. Koenig and his colleagues find answers on a case-by-case basis—through direct dialogue with the customer.
